The FDI Index is not a full measure of a country’s investment climate. A range of other factors come into play, including how FDI rules are implemented. Entry barriers can also arise for other reasons, including state ownership in key sectors. A country’s ability to attract FDI will be affected by factors such as the size of its market, the extent of its integration with neighbours and even geography.

Nonetheless, FDI rules are a critical determinant of a country’s attractiveness to foreign investors. Furthermore, unlike geography, FDI rules are something over which governments have control. FDI restrictions tend to arise mostly in primary sectors such as mining, fishing and agriculture, but also in media and transport.

Lessons from investment policy reform in KoreaBased on the FDI Index, Korea was the biggest reformer of its policies towards FDI between 1997 and 2010 among a sample of 40 developed and emerging countries. This working paper looks at the lessons can we draw from the Korean experience about how to achieve rapid and sustainable reforms.

The Codes of Liberalisation of Capital Movements and Current Invisible Operations are legally binding for OECD countries, stipulating the right of establishment and progressive, non-discriminatory liberalisation of capital movements and international financial and other services. The approach of the Codes involves unilateral rather than negotiated liberalisation. Their observance makes full use of the OECD’s “peer pressure” method.

In parallel, under the National Treatment instrument countries agree not to discriminate against foreign investors established on their territory.